"I think I was trying to suggest something about the duality of man, sir ... the Jungian thing, sir."
Private Joker, Full Metal Jacket

Wednesday, February 18, 2009

Scott Walker - not so dumb

One of my pet peeves is the tendency of folks in the blogosphere and public discourse generally to contort themselves in order to suggest that their political opponents are not only wrong, but stupid. Such has been the case this week in a number of responses to Scott Walker's proposal to use federal stimulus money to suspend the state sales tax.

I am not endorsing the idea and it's not going to happen, but it is hardly the knee slapper that some are claiming it to be.

Ken Mobile says that Walker has demonstrated his economic incompetency. The blogger known as the Recess Supervisor says he is an "greasy haired," a "whorish, no nothing," and possessed of "idiocy." State Democratic Party chair Joe Winecke says the proposal is "ridiculous," "pathetic" and consists of "fuzzy math."

Why is Scott Walker so clueless? It boils down to this:

1 Suspending the sales tax would require a change in the law. Well, yes. It is a policy proposal and these things often require changes in the law. Indeed, Walker called upon the Governor and legislature to enact his proposal into law. It may be that a change in federal law would be required (that would depend on the wording of the federal stimulus bill) but that hardly means that Walker ought not to propose what he thinks is a better idea.

2. He's using fuzzy math. Winecke, echoed by Mobile, jumps on Walker's claim that the sales tax costs the average household almost $3000. Ho, ho, they say, this cannot be. Does the average household spend $60,000 on taxable goods?Ridiculous!

Except that it's apparently true. Walker is using a mean as opposed to a median or mode. In addition, sales taxes are imposed on all sorts of transactions that get built into the price of what you buy. According to the Tax Foundation, Wisconsin's collections of general sales and gross receipts tax in 2006 was ... $2834.00 - the overwhelming majority of which (apparently $1102 per capita out of $1131 per capita in sales and gross receipts taxes)most of which is the general sales tax.

3. The tax holiday would benefit flatlanders. Everyone from Illinois would come up here and buy stuff tax free, paying use tax back home. First, I suspect that few people would actually pay the use tax. Second, such an impact would presumably have a stimulative effect. Wisconsin businesses would sell that much more. It would be, in other words, a good thing and not a bad thing, even if it did result in some increase in Illinois use tax collections.

Third, it is not clear that this has to be true. The holiday could be limited to Wisconsin residents - enforced by displaying a driver's license or other proof of residency and, perhaps, a tax identification number in business transactions. There would be some administrative cost in doing this and some one may try to argue that it constitutes an infringement on the right to travel,a denial of equal protection or privileges and immunities, but the justification would be that this is a rebate of other taxes paid by residents, i.e., the state is forgoing this revenue and the need - if there is one - to replace it would fall on its residents. I'd want to look at this more carefully before reaching a conclusion but, as I said, it is not clear to me why such a limitation would even be desirable.

4. The feds are already picking up the sales tax on new vehicles. Says the Recess Supervisor, "Wisconsin would collect no tax, Illinois or Minnesota would, and the consumer would have their state sales tax refunded to them by the federal government. Illinois and Minnesota win! Wisconsin loses! Yay stimulus!"

Not quite. They are proposing to make the sales tax deductible. That's a huge difference. But once again, don't we benefit more from flatlanders coming north to buy $40,000 cars than by - for those who itemize - losing a tax deduction on sales tax that was not paid?

12 comments:

As I said, it may be unconstitutional to exclude flatlanders but it probably wouldn't be because of the uniformity clause. Sales taxes are privilege taxes for which reasonable exemptions may be permitted under Art. VIII, sec. 1. See, e.g., Ramrod Insurance v. Dept. of Revenue, 64 Wis.2d 499, 219 N.W.2d 604 (1974)

Not so dumb? Then why did he say Minnesota had a sales tax holiday that drew northwestern Wisconsinites to the Twin Cities when:

1) Minnesota does not have a sales tax holiday,2) Iowa does, but I doubt people from NW WI will drive all that way,3) Minnesota has clothing as tax exempt year round, but the stores in western WI are still doing just fine, and4) Minnesota is now considering lifting that exemption and increasing their sales tax (which is already higher than ours)due to the financial crisis?

Walker apparently confused Iowa with Minnesota. He shouldn't but that strikes me as being on a par with Obama saying that he visited 57 states. He mispoke.

I don't know if Iowa's sales tax holiday attracts people from Wisconsin but it sure could. Last I checked it was just across the Mississippi River. Nor do I know if the absence of a sales tax on clothing in Minnesota attracts people from western Wisconsin. It seems less likely to me because it's not a special event.

But ... the idea of pulling people from other states was raised as a criticism of Walker's idea and it's just not valid. If it had that effect, it would arguably be stimulative.

Nor, it seems to me, do the merits of the Walker proposal turn on whether it attracts people from other states. The idea is that it puts money in people's pockets. I am not overly enamored of defict financed stimulus but its hard to criticize that from the left.

My understanding is that Walker left college to run for the legislature. He did not flunk out. Am I wrong? Would it really matter if he had completed a few more courses?

Shark--I don't know about you, but I prefer my elected officials to have a college degree or two. I believe people should have a college degree because it is better to have an instructor turn your "mush brain into a steel trap".

That was my first impression, but he went on to specify NW WI and the Twin Cities. That would indicate either sloppy research or flat out lying. And he's known for both.

FYI, the official story is he dropped out of Marquette when he married Tonette and went to work for the Red Cross (why do all Repubs have to work for the Red Cross?). It coincidentally happened immediately after losing his election for student president. By a large margin. To a write in candidate.

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About Me

I am President and General Counsel of the Wisconsin Institute for Law & Liberty and an adjunct professor of law at Marquette University Law School. The views expressed here are my own and not those of WILL or Marquette. They are offered in my personal capacity.